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When Your Company Carries a Stigma

#Lin Grensing-Pophal

By Lin Grensing-PophalOct 21, 2013

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It can be understandably challenging to attract and retain employees at companies whose products or services may come with a stigma attached or at businesses that have suffered from bad publicity. For instance:

Alcohol and tobacco companies.

Women’s clinics that perform abortions.

Firearms manufacturers.

Adult-entertainment purveyors.

Companies accused or found guilty of malfeasance or ethical wrongdoing.

But the scandals that rocked companies such as Enron and WorldCom in the late 20th century, and also caused Arthur Andersen LLP to restructure and re-emerge as a company now known as Accenture, offer good examples of the damage that can be done when bad things happen to companies where good people work.

Harris Interactive conducts an annual poll of how the U.S. general public views the reputations of companies, determining which rank high (Amazon.com scored the highest at 82.62—“excellent” in the 2013 survey) and which are not so well-regarded (AIG scored the lowest at 48.57—“critical”).

Yet, HR professionals on both ends of the spectrum are tasked with attracting, retaining and engaging employees. Whether recruiting for Amazon.com or AIG, they are looking for the best and the brightest candidates. How do they address and overcome these challenges (whether inherent to their product or related to an incident that has drawn negative media attention)?

When Your Company Carries a Stigma

With the possible exception of companies in the energy industry and law firms, there are no businesses on the 2013 Fortune list of “100 Best Companies to Work For” that, at first glance, have a bad reputation. Nevertheless, even stigmatized companies can provide exceptional job experiences, and that’s something important to focus on in communications before and during an employee’s tenure.

In fact, whether a company carries a stigma is often a matter of perception, suggests Brian S. Inamine, a shareholder on the labor & employment team at LeClairRyan in the Los Angeles area. “I think the fact that a person knows what your company does and is still applying for a job tells you right off the bat that they don’t have a problem working in a company with that type of brand,” he said. “They wouldn’t be there if they did.”

And Inamine believes it’s fair for hiring managers or HR professionals to ask candidates questions to ascertain their level of knowledge about the company, regardless of the industry they’re in. “A question like, ‘Can you tell me what you know about our company’s business?’ is a legitimate, legal question to ask and can give you some indication about what the applicant knows and feels about the company.”

However, employers need to exercise caution in certain circumstances. For instance, “it gets very touchy to refuse to hire a job applicant just because of their religious belief or lack of religious belief unless you are somehow a religiously affiliated institution,” said Inamine,

And if you’re a firearms manufacturer or alcohol distributor, it would not be OK to ask job candidates if they own a firearm or drink alcohol, or to use these considerations in your hiring decisions.

Of course, once they’ve hired their staff, organizations are concerned with nurturing and maintaining loyal, committed and engaged employees. Companies that carry a stigma may have to put forth more effort to maintain workers’ engagement over time—especially in the face of external pressure from friends, family and the media that may cause people to question their choice of employer.

The Importance of Open Communication

Businesses that are most often deemed “controversial” are among the country’s most regulated industries, according to Marta Moakley, a legal editor at XpertHR in New York City. “Many of these employers are subject to strict federal regulations with respect to product labeling and safety and health procedures—and any accompanying whistle-blower protections—in addition to applicable state and local requirements.”

For instance, she noted that “employers in the adult-entertainment industry may have additional posting requirements regarding the prevention of human trafficking. Businesses selling alcoholic beverages in certain states may be obliged to provide targeted employee training.”

HR professionals in these environments, Moakley said, “should emphasize overall compliance with federal, state and local laws and invest in effective employee and supervisor training.” Doing so can help their organizations avoid fines and penalties as well as any detrimental impacts to their brands.

This type of information and education can also serve to arm employees with key messages that they can share with friends, family members or others who may question them about where they work and even challenge their decision to work at “a company like that.”

Protecting Employees

Employee safety is yet another issue that may arise for controversial organizations, Moakley said. As violence at abortion clinics has tragically demonstrated, some protesters carry their personal agendas to extreme lengths.

Employers, suggests Moakley, need to be concerned about their workers’ safety and may want to consider things like “whether it’s safe to park in a parking lot or to walk into work.” If not, then they “may have to think about adding some lighting, adding some security guards, secure access, etc., so people feel secure, safe and happy about coming in to work.”

In addition, some companies may become unexpectedly or suddenly controversial. She points to the “pink slime” media explosion last year, which revealed unsavory aspects of the country’s meat-processing plants. Employers, and their HR advisors, must be continually alert to shifting perceptions that may affect their brands as well as their employees’ safety, security and level of comfort.

“There are a lot of taboo businesses out there that actually contribute a significant amount to our economy,” said Michael Woodward, Ph.D., an organizational psychologist and workplace expert. “When it comes to your career, it’s important to be comfortable with your work, and part of that comfort level is being aligned with the values of your employer. If you’re uncomfortable with the mission of your organization, it’s likely you won’t be as effective as you could or should be.”